During 2017, Julio attended school for much of the year but was supported by his parents. Julio married Jillian in December 2017. Julio graduated and began working full-time in 2018. Jillian worked during 2017 and earned $20,000. Julio’s only income was $800 of taxable interest. Julio’s parents are in the 28% tax bracket. Thus, claiming Julio as a dependent would save them $1,134 (0.28 × $4,050) of taxes.
a. Compute Julio and Jillian’s gross tax if they file a joint return.
b. Compute Jillian’s gross tax if she files a separate return in order to allow Julio’s parents to claim him as a dependent.
c. Which alternative would be better for the family? In other words, will filing a joint return save Julio and Jillian more than $1,134?